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licensing
Q3: What happens to a Sacco Society that applies and does not meet licensing requirements? Upon application for a licence, Saccos are advised accordingly on a case by case basis on the areas of non compliance and are expected to provide details on how they intend to comply.
Note New Saccos intending to operate FOSA must fulfill the capital requirements before submitting application.
Q1: When is the license due for renewal? A licensed Sacco Society will be required to apply for renewal of a licence at least ninety (90) days before the expiry of its operating license in respect of its head office and any other place of business. The expiry date for all licence will be 31st December. Q2: Having been granted a license mid year (2012), can a Sacco continue using that license in the following year (2013)? No. Regulation (4) (8) clearly states that, a licence issued under these regulations shall unless revoked be valid up to the 31st December, of the year in which it is issued and may on expiry be renewed.
Q4: Will the Authority (SASRA) give a transition period to Saccos that have applied for a licence for them to fully comply? Yes. Having applied for the license with a core capital of not less than ten million, Regulation (84) (b-g) states the areas that a Sacco shall concentrate on during the transition period. The transition period covers the capital adequacy requirement, divesture on non core business and regularization of the external borrowing by June 2014.
Highlighted
Licensing
Investments
COVERED
topics
2 Liquidity and asset liability management 3 Risk classification of assets and provisioning
Sacco Societies are member-owned financial institutions and are therefore created to serve the financial needs of the members
A Sacco Society which fails to submit reports and information required by the Authority commits an offence and is liable to a penalty not exceeding Kshs. 100,000
investments
Q3: Is there an approved system or list of software vendors by the Authority (SASRA)? No. Maintaining or approving the list of software vendors is outside the mandate of the Authority (SASRA) as per the law and the above is entirely a management issue for the Saccos. In sourcing for the software, the Sacco Society should consider the minimum requirement as stipulated in regulation 4,3(b) Q4: When or how soon can a Sacco start submitting the regulatory returns after licensing? By the 15th day of the month after the month of licensing. Q5: With the new system for submitting returns, what happens when a Sacco submits an incorrect/incomplete or a late return? The system will be able to reject incomplete returns or returns submitted in a different format. Late returns will be accepted by the system but will be flagged off as returns submitted past the deadline date. Further, Reg. 75 (1) (a) A Sacco Society which fails to submit reports and information required by the Authority commits an offence and is liable to a penalty not exceeding Kshs. 100,000 (b) A Sacco Society which submits incorrect reports and information to the Authority commits an offence and is liable to a penalty not exceeding Kshs. 100,000 per incident. Q6: Will the returns sent through the system be signed electronically? Currently no. Each Sacco will designate persons complete with a user name and password with the responsibility to log in and send returns. The Authority will therefore take the returns to be correct. However, going forward the Authority is considering adoption of digital signature.
Q1: Why is the Authority (SASRA) asking Saccos to sell shares invested in the NACOS? The Authority has not advised Saccos to sell their shares in equities. However as per circular no 10 of 2011, non-licensed Saccos whose capital were below Kshs 10 Million were requested to consider further investments in the equities of public entities and NACOs as this will further erode their core capital. This was to help such Saccos attain compliance level. Further regulation (48) (4), limits Saccos in making financial investments in non government securities to a maximum of forty percent (40%) of core capital or five percent of its total deposits liabilities. Thus Sacco societies are free to invest up to this regulatory limit.
Board committees are established to provide expertise attention and oversight to the respective operational units. This provides an effective link between the Board of directors and the management team.
are unbiased and neutral to the audit committees findings. The chairman can only remain neutral when s/he did not participate at the committee stage. Q3: Who should be entrusted with the authority to sign cheques in the Sacco? The authority should be defined in the internal policy manuals of the Sacco and should be guided by the Act and regulations. However, the boards mandate is to provide strategic and policy direction hence operational matters should be left to the technical Sacco staff on delegated authority of the board. Reg. 64 provides that the Chief Executive Officer (CEO) is responsible to the Board of Directors for the day to day running of the business of the Sacco. The Board should therefore not engage in a day to day management of the Sacco but ensure that there is a clear separation of responsibilities between the operations of the Board of Directors and executive responsibilities of the Chief Executive Officer for the running of the Sacco. Q4: How many times in a year should the supervisory and other committees meet? Regulation (60) (5) states the maximum or minimum times the Board shall meet. The committees and supervisory committee meetings, depends entirely on the activities and budget of the Sacco and are to be convened or done on a need basis. Q5: What happens on June 2014? The four year transitional period ends in June 2014 by which date all deposit taking Saccos should comply with the operational regulations and prudential standards. Deposit taking Saccos should ensure full compliance without fail.
governance
Q1: How should a Sacco constitute the board committees given the skills requirement for compliance? While regulation 60(8) stipulates that the Board of Directors shall establish such number of board committees as may be necessary to effectively discharge its function, it is imperative that such committees are aligned to the key functional units in the Sacco Society. Board committees are established to provide expertise attention and oversight to the respective operational units. This provides an effective link between the Board of directors and the management team. Thus the committee constituted should be cost effective and efficient without overlap. Q2: Why should the chairman of a Sacco not be a member of the audit committee as prescribed by the model by-laws? Reg. 57(2) The Audit committee shall consist of not more than three members appointed from the Board, one of whom shall be conversant with financial and accounting matters; Provided that the chairman of the Board of Directors shall not be eligible to be appointed as a member of the audit committee. The responsibilities of the audit committee as stipulated in the Regulations require a high degree of independence and therefore this degree of independence and impartiality should be maintained by ensuring that as the audit committee presents its findings to the board, the deliberations thereof
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